Reexamining claims about automation and labor displacement
Current UBI discussions emerged out of concerns over the role of human beings in a machine-dominated labor market. In 2013, a paper by Oxford University professors Carl Benedikt Frey and Michael Osborne claimed that 47% of US jobs were at risk of long term automation. The statistic circulated widely, prompting fears of widespread unemployment. The debate over these predictions is complex: those who deny any threat from automation often point to near-full employment, and risk overlooking the proliferation of low-paying and precarious jobs; while those who forecast mass unemployment risk assuming that technological development necessarily leads to labor displacement.
In a 2018 paper, legal scholar BRISHEN ROGERS argues that fears of a robot takeover misapprehend the real dynamics in the labor market:
"In a period of technological upswing, with companies rapidly installing robotics and other automation devices, we would also see significant increases in labor productivity. In fact, productivity growth has recently been the slowest as at any time since World War II. What’s more, productivity change in the manufacturing sector—where automation is easiest—has been especially tepid lately, at 0.7 percent over the last decade. On a related note, levels of 'occupational churn,' or the net creation of jobs in growing occupations and loss of jobs in declining occupations, are also at historic lows.
Even more striking, if firms expected artificial intelligence to be a major source of productivity in the near future, they would surely be investing in information technology and intellectual property. But they aren’t. Computers and software constituted 13.5 percent of the value of companies’ investments from 2000-2007, as the internet was coming into wide use. Over the last decade, that rate declined to 4.8 percent. These differences strongly suggest that there is nothing inevitable about precarious work or economic inequality. Hotel work, food services, janitorial work, and retail work have become precarious over the past twenty years because companies in those sectors forcibly de-unionized and/or 'fissured' away their workers to subcontractors or franchisors, thereby denying them effective access to many legal rights."
Link to the paper.
- An MIT Technology Review from 2018 surveyed the predictions of every paper published on job losses due to automation. The results: "There is really only one meaningful conclusion: we have no idea how many jobs will actually be lost to the march of technological progress." Link.
- "...even those occupations which are contracting due to technological change will continue to provide plenty of job openings over the next two decades. The challenge lies in improving the quality of these jobs going forward." Paul Osterman anticipates Rogers' arguments in a column from 2017. Link.
- Another recent paper by Brishen Rogers (to which we previously linked) continues the thread: "Based on a detailed review of the capacities of existing technologies, automation is not a major threat to workers today, and it will not likely be a major threat anytime soon." Link.
- Daron Acemoglu and Pascual Restrepo published two papers on automation and employment: the first uses industry level data to observe changes in the task content of production. The second argues that automation has been primarily concerned with reducing the need for labor, with insufficient attention being paid to socially productive investment. Link to the first, link to the second.
- Frank Levy on the relationship between automation-induced job losses and the rebirth of populist politics. Link.
- From EconFIP, a research brief on automation, AI, and the labor share. Link.
New Researchers: HEAT EFFECT
Temperature changes and the labor market
In her job market paper, economics PhD candidate VICTORIA WENXIN XIE studies the effects of temperature shocks on the labor market. While previous research in this area examines the productivity impacts of extreme heat, this paper provides detailed results on how climate change affects worker welfare—"crucial for calibrating country-specific calculations for the social cost of carbon." Focussing on the manufacturing sector in Brazil, the paper also reveals transmission-mechanism insights that suggest at mitigation strategies. From the paper:
"I provide worker-level evidence on different labor-market adjustment margins with respect to extreme heat shocks and the underlying transmission mechanism. First, using employer–employee-matched data, I find that heat shocks lead to a significant increase in the propensity of immediate manufacturing layoff. I further isolate the direct labor-productivity channel by focusing on heat shocks during the local non-growing seasons, exploiting rich municipality-level agricultural census and crop calendars. Second, I examine medium-run adjustment margins. Tracking workers across employment spells, I find limited intersectoral and interregional worker reallocation. A significant proportion of manufacturing workers fail to reallocate to another formal-sector job within 36 months. Third, heat shocks during the non-growing seasons have more pronounced impact on workers in more routine manual-task-intensive occupations."
Each week we highlight great work from a graduate student, postdoc, or early-career professor. Have you read any excellent research recently that you'd like to see shared here? Send it our way: email@example.com.
- Max Kasy presented exciting new work at our Friday research session yesterday on designing a basic income pilot. Link to his presentation slides.
- A new proposal to expand the Earned Income Tax Credit (EITC) and introduce a universal child allowance has gained near-total support from Senate Democrats. Link to Dylan Matthews' analysis on Vox. The proposal was criticized by many for retaining a phase-in, notably Matt Bruenig who condemned "the dreaded trapezoid design." Link to Bruenig's analysis.
- The political consequences of the decline of local news. By Meghan Rubado and Jay Jennings. Link.
- At Pew Trusts Trend, Jay Famiglietti maps the future of fresh water access. Link.
- A new paper by Arindrajit Dube, Doruk Cengiz, Attila Lindner, and Ben Zipperer estimates the effect of minimum wage laws on low-wage jobs across states from 1979-2016. Among the the findings: "The overall number of low-wage jobs remained essentially unchanged over the five years following the increase. At the same time, the direct effect of the minimum wage on average earnings was amplified by modest wage spillovers at the bottom of the wage distribution. Our estimates by detailed demographic groups show that the lack of job loss is not explained by labor-labor substitution at the bottom of the wage distribution. We also find no evidence of disemployment when we consider higher levels of minimum wages." Link.
- Noah Smith's Bloomberg column from this Thursday: "Republicans Turn Away From Experts and Economics." Link.
- MIT Technology Review convened several area experts to develop practical suggestions for building an ethics board at Google. Link.
- “The European Monetary Union rulebook thus locks the Italian economy into economic decline and impoverishment.” A new research paper by Servaas Storm examines the impact of deflationary policies on Italy’s crisis recovery. Link.
- "Discrimination through optimization." Researchers Muhammad Ali, Piotr Sapiezynski, Miranda Bogen, Aleksandra Korolova, Alan Mislove, Aaron Rieke examine Facebook's ad targeting system. Link. See also coverage of Facebook's ongoing legal battle with HUD over housing discrimination in its ad offerings. Link.
- A report from The Institute on Assets and Social Policy at Brandeis discusses the institutional and policy mechanisms that foster an unequal and racialized distribution of workplace benefits. Link. ht Lauren
- Aaron Benanav links the invention of the 'informal' sector to failed ILO efforts at categorizing societies "where work for wages did not constitute a widespread social norm." Link.
- Danielle Citron and Ryan Calo on "the automated administrative state." Link. From a series of posts at the Shorenstein Center covering major issues surrounding automated decision systems. Link to the series.
- "Discussing technological progress in The Wealth of Nations, Adam Smith ignores most of the famous inventions in textile spinning, iron making, and steam power, instead chooses as his paradigm of technical progress one good that is entirely absent from most current histories of the Industrial Revolution: watches. In fact, Smith makes the notable claim that, over the preceding century, the price of watches may have fallen by up to 95 per cent, which we attempt here to evaluate. To test whether watch prices had been falling steadily and steeply since the late seventeenth century we use the records of over 3,200 criminal trials at the Old Bailey court in London from 1685 to 1810. Owners of stolen goods gave the value of the items they had lost, and, because watches were frequently stolen, we can reliably track how their value changed through time. Our results highlight that the process of sustained technological progress which is nowadays seen to define the Industrial Revolution dates back in England to at least the late seventeenth century, rather than the accepted date of the mid eighteenth century." Link.